Bond insanity spreads far and wide

A recent survey showing that school districts around the state have issued hundreds of capital appreciation bonds confirms that Poway Unified and San Diego Unified are far from alone in using the insanely expensive bonds, which often defer any repayments for 20 years and usually can’t be paid off early or renegotiated.

Two county school districts have such bonds with far worse terms than Poway’s or San Diego’s. According to a Los Angeles Times’ report, the Santee district borrowed $3.5 million that will cost $58.6 million to pay off in the long term. The San Ysidro district borrowed $15.6 million that will cost $228.9 million over the long haul.

As state Treasurer Bill Lockyer says, this is an outrageous assault on taxpayers and common sense. Yet some school officials – most prominently Poway Unified Superintendent John Collins – defend the borrowing as a reasonable way to deal with crucial school needs in difficult circumstances.

Please. The investment expert quoted in a Bloomberg News account of Poway Unified’s irresponsible borrowing got it exactly right: “It’s not so much kicking the can down the road as it is burying a drum of toxic waste in the back of the school.”

Here’s hoping Lockyer gets his way and these loans become a thing of the past in California.